Detroit bailout?

Tuesday, November 18th, 2008 | Economics |

Mich Weinsteain has a roundup of opinion. For most people, this is the most relevant fact:

The chart above shows average hourly compensation for the Big Three ($73.20) and Toyota (TM) ($48.00), compared to average hourly compensation for Management and Professional Workers ($47.57), Manufacturing/Goods Producing ($31.59) and all workers ($28.48), data available here.

Should U.S. taxpayers really be providing billions of dollars to bailout companies (GM (GM), Ford (F) and Chrysler) that compensate their workers 52.5% more than the market (assuming Toyota wages and benefits are market), 54% more than management and professional workers, 132% more than the average manufacturing wage, and 157% more than the average compensation of all American workers?

Detroit’s problem isn’t a temporary downturn in the economy. Their problem is unsustainable cost structures for their labor. If that isn’t fixed then they’re doomed to fail eventually.

5 Comments to Detroit bailout?

SayUncle » On the auto industry bail out
November 19, 2008

[...] Really? I was gonna go with unsustainable labor costs. [...]

Vote For David
November 19, 2008

I like how GM is going to sink in a year after blowing right through $16B in cash reserves, but adding another $8B ($25B / 3) on top of that will save them. Riiiight. The bailout is for the UAW. The Democrat leaders of Congress should be ashamed. But they don’t know how. (”Neither could they blush”)

Les Jones
November 19, 2008

Good point. $8 billion isn’t much to a company that size.

Feeling sympathy for Detroit? | Les Jones
November 20, 2008

[...] sympathy for Detroit? Me neither. Besides bad cars and excess compensation, the list of paid holidays for United Auto Workers members is insane (hat tip to [...]

Detroit was losing money in the “good years” | Les Jones
December 8, 2008

[...] sufficient. Those companies have to change their business models to survive. Reigning in their princely employee compensation has to be part of the [...]